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The Multimillionaire Janitor

July 17, 2023
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Josh Viljoen
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Josh Viljoen

How janitor Ronald Read earning a modest pay check amassed a fortune


Investing is one of the few industries where behaviour is more important than knowledge. The fascinating story of Ronald Read is a true testament to this.

 

When Read died his family was astounded to find out that he had accumulated a nest egg of over $8 million (the equivalent of more than R117 million). Read came from humble beginnings and no one would have guessed that he was worth 7-figures, based on his appearance and how he lived his life.


Money has many ironies. Heres an important one: Wealth is what you dont see. - Extract from The Psychology of Money by Morgan Housel

 

Read was a World War II veteran. After returning home he worked as a gas station worker and later as a janitor. He was also married with two kids.

 

So whats the Secret?

 

You must be thinking that there is some sort of catch here. How can a janitor accumulate such a fortune? No. Read did not win the lotto nor was he a day-trading forex guru. His wealth accumulated over time and not by chance, but rather through saving and living below his means.

 

Everyone that knew Ronald Read, knew that he was extremely frugal. He drove an old second-hand car, mended his clothes with safety pins and chopped his is own firewood. He was able to maintain this frugality right up until his nineties when he passed away.


Based on Reads character and lifestyle, one can understand how surprised his children were to found at that has was secretly a multi-millionaire.


The way Read lived was unconventional and he was an outlier when it came to his level of frugality. I am not suggesting that we should all live like this and deprive ourselves of all material desires, but there is certainly something to take away from the way Ronald lived.

 

His Investing Strategy
 

Read followed a very conservative investment strategy similar to that of Warren Buffet. He bought stocks and held them for the long-term. This required some strong willpower, but he managed to keep it up for his entire lifetime. I can fully understand the temptation to sell a stock after seeing significant gains. It can be tough to resist the urge of clicking the big red sell button.


It was reported that at the time of his death Read had held over 95 stocks, many of which he held for decades.

 

He mainly invested in blue-chip stocks such as Procter and Gamble, J.P Morgan Chase, and Johnson & Johnson.


How Did He Spend His Fortune

 

Read was extremely charitable with his estate and left more than $6 million to his local community hospital and library.

 

These were the two single largest donations either of these facilities had ever received and one would not have expected it to come from a janitor.

 

What Can We Learn From Ronald Read?

 

1. Time In the Market Versus Timing the Market - Instead of constantly trying to time the market by buying and selling, he picked stocks and held them for the long term thus negating the effects of any short-term market noise.
 

2. Reinvest Your Dividends - By reinvesting his dividends back into the companies he held he was able to accumulate more shares using this income without having to spend a cent.

 

3. Dont Speculate - Read exclusively bought blue-chip stocks these are household names with a steady reputation for growth and typically pay out dividends. He didnt invest in the latest SPAC or penny stock.

 

The Main Take Away

Most working adults will earn far more in a year than Ronald Read did and thus there is no reason why you cant save and invest to amass an even greater net worth than Ronald Read. The problem is that most people dont have the discipline to save and invest regularly. Investing doesnt need to be a daunting process and by automating your investments into a few index funds you can be set for life and never have to make another decision in your life.


We can all afford to live more minimally and be less materialistic. Following such a mindset can set you apart from the crowd and allow you to truly become financially free.


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